business credit scores

3 Ways Invoice Factoring Will Affect (Help!) Your Credit Score

Your business credit score is something that can have a huge impact on how you’re perceived by your customers, competitors, and potential lenders and investors. The higher your score is, the more credible and trustworthy you’ll seem.

Invoice factoring is a form of business financing that can impact your credit score. At Triumph Business Capital, we get questions from business owners who are concerned that factoring their invoices will have a negative impact on their credit score – and yet the opposite is true. Here are three positive ways that invoice factoring can affect your credit score.

#1: Get Business Capital without Lowering Your Credit Score

If you apply for a business loan or line of credit, the inquiry itself – even if you aren’t approved – can have a negative impact on your credit score.

Factoring is different because it provides an ongoing source of capital by advancing money on your invoices. As soon as you complete work or ship an order to a client, you can factor the invoice and get your money immediately.

That cash flow doesn’t require a check of your business credit score. In other words, factoring your invoices can give you the money you need to grow your business without your credit score taking a hit.

In turn, invoice factoring can increase the chances that down the line, you’ll be able to qualify for additional financing.

#2: Pay Your Bills on Time – or Early

The single biggest factor in determining your business credit score is the timeliness of the payments you make to your creditors and vendors. It’s common for small and medium-sized businesses to wait until they get paid to make good on their bills. The problem with this approach is that it inevitably leads to delinquency – and ultimately, to a credit score hit.

Factoring your invoices provides you with the day-to-day cash flow you need to pay your bills on time. You may even be able to pay them early, increasing your credit score and making it easy for your business to qualify for credit terms with your suppliers – or even to raise your credit limits, so you can accept and fulfill large orders to grow your business.

#3: Increase Your Credibility with Customers and Lenders

A solid credit score increases your credibility. Anyone who’s considering doing business with you, whether it’s a supplier, a vendor, a customer, or a lender, will likely check your business credit score to see how you run your business. A high score, while not the only consideration, helps secure their trust.

Another way of looking at it is that a low credit score is very likely to have a negative impact on your business. Factoring your invoices provides the financial stability you need to increase your score and build financial credibility over time.

Get business credit help from Triumph Business Capital

You don’t need to worry that factoring invoices will hurt your company’s credit score and credibility. In fact, the regular cash flow and financial stability that invoice factoring provides can help you increase your score, attract new customers, build credibility, and grow your business.

To learn more about Triumph’s factoring services, contact a representative today. We help thousands of business owners from different industries get the working capital and business credit help they need to grow their businesses.